Out of Gas?

Indicators: June 1

15.7% is the decrease in New Mexico’s proved natural gas reserves between 2004 and 2009, according to the US Energy Information Administration.

41.55% is the increase in the country’s total proven gas reserves during the same period.

" New Mexico is fourth in oil reserves and second in gas reserves in the United States, so you can see how important this energy-rich state is—and how well we could be doing if the current administration had not imposed the pit rule…That’s why they’re leaving our state."—Gov. Susana Martinez in an April 2010 radio interview

In 2004, at its highest production levels this decade, New Mexico had the third-largest proven natural gas reserves in the nation, according to the US Department of Energy. By 2009—the most recent data available—New Mexico had slipped to sixth place, even as surrounding states’ reserves expanded. Wyoming, Colorado, Texas and Utah saw increases ranging from 56-88 percent; Arkansas’ proven reserves swelled by 492 percent.Despite decreasing reserves, the state still relies on oil and natural gas proceeds (taxes, royalties and other income) for approximately one-fourth of its revenue, New Mexico Oil and Gas Association President Steve Henke tells SFR.But when asked about the decline, Henke cites the low price of natural gas, the majority of which lies in northwestern New Mexico’s San Juan Basin, a mature gas field that’s already been drilled extensively.“Production out of San Juan Basin has peaked but, in addition, with the depressed price, there has not been new drilling,” Henke says.Natural gas prices are low due to shale gas discoveries in other states, Henke says. Low prices discourage drilling, which precludes the discovery of new gas reserves.Henke says even a small increase in the price of gas could mean big dividends for the state, but it’s still a volatile business.And according to Sigmund Silber, water issues chairman of the Sierra Club’s Rio Grande Chapter Northern New Mexico Group, the state’s reliance on gas revenues ignores the practical limits of a finite resource.A decrease in gas reserves, Silber writes in an email to SFR, “suggests the need to develop alternative energy sources and other areas of economic activity.”